Brent Struggles around $80

Brent crude oil prices experienced a 0.6% increase, reaching $79.50 per barrel for the week. On Tuesday, they surged even higher to $81.36 per barrel, marking the highest level since December 1. However, prices quickly retreated below the $80.00 mark later in the week.

The recent attacks by Houthi rebels on commercial vessels in the Red Sea have raised concerns among investors, despite the naval coalition formed by the United States and the United Kingdom to safeguard this vital shipping route. The U.S. administration alleges that Houthi rebels receive support from Iran, and this has sparked public discussions. If the attacks persist or escalate, it raises questions about whether Iran and its allies are intentionally escalating geopolitical tensions in the region.

Investors seem divided on this scenario, with some committing $41.2 million to the United States Oil Fund LP (USO) last week, while others view U.S. President Joe Biden as politically weakened. The possibility of Biden sanctioning an attack on Iran, leading to a blockade of the Strait of Hormuz and disrupting the oil market supply, could impact fuel prices and jeopardize Biden's chances for re-election in November 2024.

The return to operations in the Red Sea by two major container shipping companies, following the establishment of a U.S.-led coalition to protect vessels, was a significant factor in the 1.8% pullback in oil prices to $79.20 on Wednesday. The American Petroleum Institute (API) reported a rise in U.S. oil inventories by 1.837 million barrels, following the previous week's increase of 939,000 barrels. The U.S. Energy Information Administration (EIA) is expected to release official figures later, with a projected decrease of 2.704 million barrels compared to the previous week's rise of 2.904 million. While this data could support oil prices, it might not be sufficient to push Brent futures above $80.00 per barrel, as investors are awaiting more substantial catalysts.

Expectations from the OPEC+ alliance to boost oil prices were dampened by Russia's Energy Minister, who anticipates Brent crude prices to remain in the range of $80.00-$85.00 per barrel in 2024. This suggests that Russia is content with the current price levels.

From a technical perspective, oil prices appear bearish. Failure to sustain levels above the resistance at $82.00-$84.00 per barrel may signal a downward movement towards the support zone at $72.00-$75.00 per barrel.